Explanation of riders

Question 1

Even if the ENGL premium requirement is not met, what does the client have the opportunity to do?

Answer 1

The client still has the opportunity to pay additional premiums in order to catch up and satisfy the ENLG premium requirement, and this is interest free.

Question 2

What does the Waiver of Monthly Deductions Rider do, and how is this different than the Disability Payment of Specified Premium?

Answer 2

The WMD rider waives the monthly charges that keep a policy in force. This is different from the DPSP rider which pays the premium to keep the guarantees in effect.

Question 3

What would trigger the Accelerated Benefit Rider?

Answer 3

The insured is certified by a doctor as being terminally ill with one year or less left to live.

Question 4

What does the Extended No-Lapse Guarantee do?

Answer 4

The ENLG, which can extend to as long as age 90, guarantees that the client’s policy will not default, even if the cash surrender value falls to zero or below, as long as the ENLG premium requirement is met.

This may be ideal for pre-retirees who want flexibility to alter their premium schedule in the future should they encounter an unexpected change in cash flow or financial hardship.

Question 5

What are some of the details of the Quit Smoking Incentive (QSI)?

Answer 5

• Available for issue ages 20–70
• Not available for substandard ratings or cases with a flat extra
• Term Conversions and internal replacements will require additional underwriting if the original policy (whether replaced or converted) was issued more than three years ago
• Policies upgraded to Standard Smoker via the HealthStyles program will require additional underwriting

Question 6

Describe the Return of Premium Rider.

Answer 6

The Return of Premium rider increases the death benefit by a percentage of premiums paid, typically 100 percent.

Question 7

What does the Long Term Care Rider do?

Answer 7

The LTC Rider allows the client to accelerate a portion of the death benefit to help pay for long-term care expenses if the client is unable to perform two of the six activities of daily living (ADL) or has a severe cognitive impairment.

Question 8

With the Quit Smoking Incentive (QSI), what happens if the insured fails to stop smoking?

Answer 8

If the insured fails to quit smoking and/or does not apply for the Non Smoker policy charges within the first three policy years, the policy will remain classified as Smoker and will reflect current Smoker policy charges from that point forward.

Question 9

What is an additional benefit that we provide with the LTC Rider?

Answer 9

Provider Pathway is a service that can help not only clients navigate the LTC world, but also the people they care about. This could include a spouse, a parent, a child, or any family member.

Question 10

What cases are not eligible for the HealthyEdge program?

Answer 10

HealthyEdge is not available for Substandard cases, cases with volatile histories, or for Term conversions. But it is available for products that offer the Long-Term Care rider where it can be applied to improve the base policy assessment.

Question 11

Why might someone want the CVE Rider?

Answer 11

One reason is for business planning. Raising the net cash surrender value of the policy might be beneficial from an accounting perspective. The second reason is with premium financing, where the higher net cash surrender value can decrease the amount of needed out-of-pocket collateral.

Question 12

What does the HealthyEdge program offer?

Answer 12

HealthyEdge – our proprietary crediting program- replaced the HealthStyles program at the end of 2017. This new program allows clients with favorable health and lifestyle factors the opportunity to receive underwriting upgrades. The program offers:

• Upgrades on Standard or better risks to a maximum of Super Preferred, for clients ages 20-70
• On all face amounts, and
• On all term and permanent products

Question 13

What does the CVE Rider do?

Answer 13

The Cash Value Enhancement Rider waives a portion of the policy’s surrender charge during the first five policy years. This means the net cash surrender value of the policy is higher than it would normally be for purposes of surrender or policy-lapse testing only. The rider does NOT add extra cash value to the contract.

Question 14

What issue was the Estate Preservation Rider created to address?

Answer 14

Any life insurance policy transferred to a trust will be brought back into the client’s estate if death occurs within the first three years. This is commonly referred to as the three-year look back rule. If the policy is brought back into the client’s estate, then they may need to pay estate taxes on the death benefit.

Question 15

With the Accelerated Benefit Rider, how much can the policyholder receive?

Answer 15

Up to 50% of the death benefit to a maximum of $1MM.

Question 16

How does the EPR solve the problem it was created to address?

Answer 16

The Estate Preservation Rider provides extra non-convertible coverage to help pay for the added estate taxes during the first four policy years. The EPR will add approximately 122.22% of the policy face amount during the first four years.

Question 17

What is the Overloan Protection Rider used for?

Answer 17

When the client has a large outstanding loan balance and is facing a lapse-pending situation (surrender squeeze), the Overloan Protection Rider can possibly prevent an adverse taxable event by triggering the policy to become a fully paid-up policy. The rider waives future monthly deductions to make sure the policy doesn’t lapse.

Although the Overloan Protection Rider paid-up policy doesn’t provide much actual death benefit to the clients beneficiaries, the larger concern that the Overloan Protection Rider is addressing is to deal with the potential tax problems for the client.

Question 18

Why was the Accelerated Benefit Rider created?

Answer 18

So clients with terminal illness, who need additional money for healthcare or quality of life services, can access the death benefit while they’re living, without having to sell or surrender their policy.

Question 19

What do underwriters look at in terms of health and lifestyle factors for the HealthyEdge program?

Answer 19

Underwriters assess a variety of health and lifestyle factors, such as:

• Annual checkups
• Favorable cardiac tests
• Regular screening tests, such as mammograms and colonoscopies
• Lifetime non-smoker, and
• Regular exercise

Question 20

What is a key differentiator with regards to our LTC Rider and how expenses are paid?

Answer 20

The LTC Rider works on a reimbursement basis, which means we only accelerate enough death benefit to pay for the actual expenses incurred. We can also pay the service provider directly.

Question 21

What are some situations where the Return of Premium Rider might be used?

Answer 21

In business planning, where a business wants to buy insurance for their executives. It might also be used in premium financing cases.

Question 22

Explain the Quit Smoking Incentive.

Answer 22

The Quit Smoking Incentive (QSI) allows all Standard and Preferred Smokers to receive Standard Non Smoker policy charges for the first three policy years on certain UL and VUL products. The earliest an insured can request a change to Standard Non Smoker is on or after the first policy anniversary.

To maintain Non Smoker policy charges beyond year three, the insured must provide satisfactory evidence* that he/she has quit smoking for at least 12 consecutive months and his/her micro-urinalysis must be free of nicotine or metabolites in order to be considered Standard Non Smoker.

Question 23

What does the Policy Split Option do?

Answer 23

Available on our survivorship insurance products, it gives the policy holders the right to split the life insurance policy into two separate and equal individual life insurance policies, one for each insured. This can be done without evidence of insurability.

Question 24

For the LTC Rider, how much of the death benefit can be accelerated per month?

Answer 24

1%, 2%, or 4%

Question 25

What is a “surrender squeeze?”

Answer 25

When a policy has a large outstanding loan balance (excessive indebtedness) and is facing a lapse-pending situation. If the policy lapses, the policy value in the loan collateral account will pay off the loan, but this amount will be considered a “gain” by the IRS and therefore taxable.

Question 26

Why would clients want to use the Policy Split Option?

Answer 26

The Policy Split Option can be enacted in case of divorce or tax law change. This eliminates the time and cost of reapplying for individual policies to meet updated planning needs, as each insured retains control of his or her policy proceeds and continues his or her insurance protection. It also protects against one of the insureds being declined, which would be a possibility if the clients need to go through underwriting.